Can oil price shrink to $20/barrel?

Can oil price shrink to $20/barrel?

Could oil price really go down to $20/barrel? Depends on who you ask.

“The risk of $20 is driven by what we call a breach in storage capacity, meaning that you have supply above demand, you fill every storage tank on planet earth and then you have nowhere to put it,” Jeff Currie, head of commodity research at Goldman told CNBC from the annual Oil & Money conference in London.

However, Fatih Birol, the executive director of the International Energy Agency (IEA), told CNBC on Tuesday that low prices would prompt U.S. producers to cut output, creating upward price pressure.

“When we look at the next few quarters, we expect U.S. oil production to decline because of low oil prices and in Iraq, production growth will be much slower than in the past. And the demand is creeping up,” Birol told CNBC on Tuesday from the Oil & Money conference.

“So therefore, to think that oil prices will be with us forever may not be the right way of thinking.”

Oil futures marked their highest settlement in five weeks on Tuesday, as the Organization of the Petroleum Exporting Countries (OPEC) forecast big cuts to oil investments that are expected to ease production and reduce global crude supplies.

Speculation over a possible meeting among the major oil producers also provided support for oil prices, ahead of weekly updates on U.S. petroleum supplies.